P&G chief lays out $1bn marketing efficiency vision

P&G's chief executive Bob McDonald has promised to deliver $1bn (£632m) in savings throughout the next five years with more efficient marketing, while stressing "we are not looking to make significant cuts in marketing support behind our brands".

The $1bn target for cost savings in marketing is part of an overall $10bn target for cost savings across the company by 2016.

The target is designed to restrain cost growth at P&G from $65bn last year to $75bn in 2016, rather than $85bn.

R&D would be relatively protected, McDonald said, but 5,700 roles will go across the 127,000-strong workforce by June 2013 as part of a $3bn target for savings in overheads.

"We plan to reduce enrolment in non-manufacturing organisations by 10%, roughly 5,700 roles by the end of next fiscal year. This includes the 3% reduction we have already announced for this year," he told analysts in New York yesterday.

Marketing roles could be among those to be cut through "selective hiring, attrition and restructuring" but it is not clear at this stage how many are affected.

P&G's marketing costs were $9.3bn in the year to 30 June 2011, and McDonald said he expected this year "to be roughly on par" with 2011.

McDonald said: "Similar to R&D we are not looking to make dramatic cuts in the support of our brands.

"In fact we want to increase reach, increase frequency, and increase the effectiveness of our advertising impressions with consumers.

"Even delivering a modest level of efficiency each year can amount to nearly a billion dollars of savings versus simply letting these costs grow at the same rate as sales.

"We’re very confident we can still do this while increasing the number and quality of impressions each year."